Elizabeth Arden nudges back into the back despite sales slide

Ongoing weakness in the North American fragrance market has dragged Elizabeth Arden sales down but profit for the first quarter is up on last year.

The prestige fragrance and cosmetics business managed to nudge net income for the first quarter of 2010 fiscal year into the black, which compared favourably with a loss in the same quarter last year.

Sales for the period came in at $265.2m, a 6.7 percent drop from the $284.2m recorded in the same period last year, 1.7 percent of which was put down to a negative impact from current exchange.

Net income was $40,000 compared to a loss of $12,516 in the same period last year which can be partly explained by the significant expenses incurred by the company regarding the Liz Claiborne licensing deal in the prior year quarter.

The company said these results were as expected and were aided by an improvement in the travel retail sector.

CEO Scott Beattie described the quarter as ‘encouraging’.

“Sales results were at the high end of our expectations, and earnings exceed prior guidance, aided by improved trends in travel retail and distributor markets and more favourable foreign currency rates,” he said.

Although the company is predicting a healthy holiday period, Beattie was not over confident, particularly regarding the state of the North American fragrance sector.

“There are signs that economic conditions are beginning to improve, and, while early, we are expecting good performance from our new launches for the holiday season.

“We are still not yet seeing, however, a return to normalized replenishment by our retailers, particularly in our North American fragrance business,” he added

Reflecting the weakness in this sector, sales in the North America Fragrance business segment dropped 5.3 percent to $168.13m. International sales dropped 9.7 percent but a proportion of this is down to an unfavorable impact of currency exchange.

Looking to the future, Beattie said the company expected inventory replenishment to improve but that it was difficult to predict the timing or magnitude of any improvement.